J.P. Morgan to Sell Local Mutual Funds in China

Chinese authorities have given J.P. Morgan Chase 's China unit a bit of good news to offset the generally unpleasant recent headlines involving fines and a criminal probe into the investment bank’s U.S. parent. The local unit said Monday that it has received approval to sell local mutual funds in China, joining the first batch of foreign banks that can compete with local banks in a sector that is expected to cross the $1 trillion mark in the next couple years.

The locally incorporated bank will begin by offering a renminbi-denominated money-market fund to Chinese institutional and corporate investors, it said in a news release.

As of the end of May, assets in China’s mutual-fund sector totaled 3.98 trillion yuan ($650 billion), equivalent to 4% of deposits in the banking system, managed by 81 asset management companies, according to the Asset Management Association of China. Z-ben Advisor, a Shanghai-based consultancy with a focus on securities investment, has forecast the figure may exceed 15 trillion yuan by 2020.

“Institutional and corporate clients in China are growing in size and sophistication… demanding more robust investment solutions and service,” John Donohue, the head of J.P. Morgan Global Liquidity, said in the news release.

Foreign banks are eager to access the local fund-management business, which is currently dominated by Chinese state lenders including Industrial and Commercial Bank of China, Bank of China and China Construction Bank.

J.P. Morgan set up its locally incorporated bank in China, headquartered in Beijing, in 2007.